Smart contracts have been around for a long time, as far back as the 90s when American cryptography Nick Szabo established the principle. However, it existed in theory alone because technology in that generation had not advanced to the level where the principle could become real and applicable.

In 2024, the concept of smart contracts has spread across regions and industries, introducing much-needed acceleration to systems and in the case of this article, African businesses. Before we delve right into an examination of smart contracts in African enterprises, let's lay a basic foundation of what smart contracts are.

Definition

Smart contracts constitute a set of digital promises fulfilled through mathematical algorithms that are programmed to execute transactions automatically when specific conditions are met. But this quality of self-execution is not the only characteristic of smart contracts. Other key features are:

Transparency
Immutability
Speed
Security
Autonomy
Cost-effectiveness and others

This transformative innovation also consists of components and structures that work cohesively behind the scenes to enable it to function the way it was programmed to. It's a complex yet simple concept. And Africa is going full throttle in introducing this simplicity to business processes in the continent.

African Businesses That Leverage Smart Contracts

In Africa, several businesses are leveraging smart contracts to unlock new opportunities, boost transparency, and streamline operations. These businesses showcase the diverse applications of smart contracts across sectors, contributing to innovation and efficiency in their respective industries.

Here are examples of African businesses leveraging smart contracts.

Seso Global (Nigeria)
Momint (South Africa)
Pesabase (Kenya)
SureRemit (Nigeria)
Sun Exchange (South Africa)
Land LayBy (Kenya)
Luna (South Africa)
Wala (South Africa)
Bitland (Ghana)
House Africa (Nigeria)

How Smart Contracts Impact Businesses in Africa

Smart contracts improve productivity and the quality of delivery for African businesses in several ways. But this article will highlight four of the most powerful ways this technology is transforming Africa's business landscape:

Financial Inclusion

Through DeFi services powered by smart contracts, individuals without access to traditional banking options can participate in financial activities with ease. This includes trading, borrowing, lending, and other microtransactions. DeFi services also provide underbanked individuals in the region with microfinance opportunities that strengthen small businesses.

Cost Reduction

By eliminating intermediaries, smart contracts reduce the need for brokers and banks thereby decreasing transaction fees and saving resources for businesses. Another useful way smart contracts influence the growth of African businesses is by incorporating automation into processes. This also reduces costs when businesses consort to this alternative to manual intervention.

Fraud Reduction

The immutability of blockchain ensures that transactions are impossible to manipulate once a smart contract has been activated on any blockchain. Every piece of information logged onto the blockchain is permanent, introducing more transparency and accuracy to business processes.

Supply Chain Optimization

The quality of permanence in blockchains makes it easier for businesses to trace transactions and give a proper account of all activity like payments, inventory, and so on. With the automation of smart contracts in operations, payments can be made on time, and business conducted without disputes.

Conclusion

In the dynamic world of African businesses, smart contracts are the heroes rewriting the rules of the game. These digital promises, fueled by algorithms, bring a series of benefits – think transparency, speed, security, and cost-effectiveness – into play.

With businesses like Seso Global, Momint, and Pesabase leading the charge of incorporating smart contracts into business, it's just a matter of time before more businesses in the region follow suit.

It's important to understand that smart contracts are not only lines of code; they're the architects of financial inclusion, cost reduction, fraud resistance, supply chain, and a host of other benefits for industries. And businesses all over Africa are taking bold leaps into the future of entrepreneurship with smart contracts.